time and will have live on c- span television and radio. more on the president's health- care proposal from former senate leader tom-0, speaking on "the early show" he said controlling the cost of malpractice insurance would have to be part of the new plan and that toward reform will be on the table and it is important that all stakeholders in the debate be given a chance to be heard. he was president obama's first choice for secretary of health and human services but withdrew his name in a controversy over his personal finances. .

the economic stimulus plan that has increased unemployment benefits and made some ineligible for food stamps. under the economic recovery plan laid off workers have seen a $25 per week raised in their checks as part of the expansion of benefits for the poor, but they did not raise the income cap for food stamp eligibility. three-term senator of utah is facing challenges. in the past week, two gop candidates have announced plans to run against him. insiders say that there may be more primary challenges ahead. it is an unusual predicament for senator bennett.

finally, political reports that illinois senator roland burris has not been the lead sponsor of any of the 1300 amendments filed in the nearly five months since he was one into office. when pressed by reporters with his dealings with the impeached governor previous to him he has asked reporters to let him focus on his senate work instead. those are some of the latest headlines. "washington journal" continues. host: phil mattingly is the economics reporter for cqpolitics.com with an extensive piece looking at industry regulation. he reports this morning that the administration as of wednesday will announce an initial white paper on how the proposed to change regulatory agencies. what is ahead? guest: the key thing is that the change will not necessarily

be the massive restructuring everyone expected. they will keep the current form, basically, but they will have maybe a council charged with looking at systemic risk. though too big to fail institutions. host: the cover of last week's addition -- this is a. building a bigger umbrella" -- the term umbrella comes up a lot. guest: yes, there is an opt-a in "the washington post" this morning. they want the fed to have the ability to see everything, to have all the information. -- that is in and op-ed this morning. it is to keep us from getting where we were in september.

host: which agency is likely to be the one agency that takes on more? guest: it will definitely beat the fed. the federal reserve, despite criticism of the past year is probably the best in terms of staff and capability. there are best positioned to take on the role of a brand new regulator. they would prefer to go with something they already have. host: in this extensive piece you have a time line of the history of banking and financial regulations over the years. we get a lot of questions about

these. the banking act of 1933 which created the fdic also -- it established the provisions, and then, in 1909 it repealed the glass-the goal act. guest: the act basically had separated financial institutions. banks were not allowed to move into purchase other institutions. that is the glass-steagll act. it was to do their best to make sure that nothing would happen again. the idea in 1999 was that is essentially glass-steagall was

choking off innovation. they thought the company should be allowed to spread into the larger institutions. it repealed the act and allow bank holding companies to purchase insurance firms and to expand business. host: you write in your article that the white house is likely to include an emphasis on both consumer rights and investor protections. the will be new limits on what corporate executives can be paid. -- there will be new limits. don't agencies now guest: do that yes, especially the fed and the sec have such divisions. but right now people say that they dropped the ball. these are large agencies that have been on much as major failures have occurred. the administration is likely to propose an entirely new agency. it might be the only new

creation designed solely to protect consumers from various financial products. host: phil mattingly is with us until 9:30 a.m. eastern. what kind of financial regulations existed when aig nearly collapsed? guest: you get a lot of argument that financial structure existing was effective, regulators just dropped the ball. but with the umbrella idea, you will see there were gaps. even though you had this alphabet soup of regulators who overlapped there was no trading of information. they missed important things. host: you write about the aig

that the office of thrift- supervision were overwhelmed by this. guest: actually, people from the disease came to testify before congress. they claim there were not built to oversee something as massive as aig. the insurance component has largely succeeded, but they had one component, the financial products division which created these credit default swaps which people have the lanais right now -- and those ots which oversees savings and loans found itself as the primary international regulator of this firm and were overwhelmed. host: president obama will release this white paper this week. tell us withabout the

political procedure to get this through both the house and senate. who are the key players? guest: that two key players are burning franbarney frank and chr dodd, both democrats. they will lead the conversation. chairman barney frank has said that the house plans to pass its version of the regulatory overhaul by the end of july. senator dodd is taking a lead on health care. that will be in the fall. those will be the two prime leaders. republicans have more of a voice in the senate than in the house. you will see the administration presented its plan wednesday. host: bryan, texas, first up on our independent line.

caller: one thing we do not hear about is how lucky, praise god, that george bush did not go along with putting social security into all these hedge funds and derivatives. think of the disaster. i am concerned about the bailouts of these wall street operators who are in the business of giving american taxpayer's business. these better not be derivatives. if anyone should lose its should be them. we should help homeowners. they should not reward these guys for their corruption. they make too much money and have no incentives. the only incentive they have is to steal. thank you. guest: to the point -- it is a good one -- though rage throughout the country at all the bailouts. everything over the last 10

months. it is probable. you see this consumer protection agency -- where it has come from. it was not always the plan. in the last couple of months it has really gained steam. it is their effort to address the anger of the average person. the non-wall street person, if you will host: how much so far has the government provided in bailouts? guest: in terms of the park, a belief in the upper five hundreds. $68 billion will begin to be paid back by the firms on wednesday. in terms of the overall you have the fdic, the fed, the resources number in the trillions. host: here is williamstown,

mass. on our democrats line. caller: the fed has had more regulatory power than any financial regulatory institution in history, yet we got into this horrible crisis. although some of the problems were outside the banking system which the fed did not control, many were inside. so part of the crisis represents a great failure of the way that we regulate banks and of the federal reserve's role. isn't it strange to have the solution to give the fed a few more powers? does that really seemed appropriate? might we not need a different approach? guest: the caller hits on the hot-button issue. you have a lot of folks in congress saying, hang on a

second. the fed had a lot of power. now you are trying to expand. yet the system had collapsed. why should the fed be given more? host: we asked our previous guest about that. how do you close the barn door? guest: the biggest thing you will see, there is a provision in the federal reserve act. it is what allowed chairman ben bernanke under exigent circumstances to open the lending window to any institution from a bank to insurance co., to an ice cream shop. most people considered that and necessity. but you will see will add a step to that. maybe after three months the fed needs to close it down.

in some way to rein in the power. host: here is tampa, fla. on that our republican line. caller: i would like to ask you a question. they regulate a lot of things. then they turn around and said that they will regulate these people at the top who get ridiculous bonuses. once the government steps in to say they are bailing them out i think all of that should come to an end, do you know what i mean? guest: it is something the administration has addressed just last week. they officially unveiled their restrictions on recipients of the tarp money. that includes appointing a compensation for czar, special master of pay to look directly at that. if you have received federal funds, the government believes it has the right to tell you what you can and cannot receive.

host: that is for those receiving federal funds. going forward it it would then set up systems for overseeing executive compensation? guest: absolutely. last week they laid out a proposal to give shareholders more of a say on pay legislation. it would allow the sec to give a rule to allow shareholders to have a non-binding vote on executive compensation. host: why have shareholders not had that in the past? guest: it has faded away. it fitted under the premise that these guys are the experts and know what they're doing. if they are bringing back money which in the past decade they did, they should get whatever. host: greensburg, pa., on our

independent line. caller: good morning. i wanted to comment on the absurdities of a regulatory system that is invasive and if that insists finding out about these companies when the federal reserve has never been audited. never. 224 house members have co- sponsored a bill to audit the fed. that never comes to light on any of the major media. the fed was sold in 1913 on the india that there would be able to smoothes -- on the idea that

they could smooth out the boom and bust and years later we had the great depression. guest: their returns to the previous callers comment on why we would give so much power to the fed. this bill would allow the government accountability office to audit the federal reserve which is currently not allowed. that right there is the perfect sign that people are very wary of its power right now. not just the conspiracy theorists. the average rank-and-file lawmaker is worried host: right now good morning on our democrats line. caller: i am 70 years old, so give me a chance. it is about people my age.

first of all, this young man -- i am pretty sure he should know that in 1981 newt gingrich went all through the congress, everywhere, talking about de- regulation. that is one of the biggest things that ever tore this country apart. with the regulation you have the insurance companies -- de- regulation you have the insurance companies owning hospitals. we cannot get anything. all long time ago insurance was non-profit. they make money on everything. newt gingrich and a lot of republicans bought into the de-

regulation and bought stock. guest: many folks these days are very angry at the hands-off approached the republican lawmakers have largely pursued over the last couple of decades. it goes back to the point where people say that the government removed its hands from the situation, presumably hoping it would allow the free market system to thrive. instead of the system collapsed. you have democrats who want to push regulation far. republicans in both the house and senate said something needs to happen. they say you cannot go too far. we do still have a free-market system. to put the governments hands too deep would be to cut off

innovation. caller: good morning. your guess is very informative. i'm concerned that we have more czars than russia. from the 1960's on, once we went off the gold standard we make up numbers and the dollar is not worth anything. if your company does not succeed, the best medicine is the failing of the company. when we talk about bailouts, i believe any company -- the best thing for the society is the elimination of the business. here is a great idea. let the government treat the people just like i treat my checking account. if i do not have the money i do not spend a. the best medicine is the total collapse of the financial

industries, let everything fall apart, and then from the ashes we can rebuild on value. there will be a true value for every dollar that is worth x a mount of gold. what would this society look like if we were still on the gold standard from the 1960's? guest: the gold standard is certainly an issue. it is always on the periphery. i do not think at this point in time it would ever be realistic to move back to that time. instead of letting -- letting everything fail and go to ashes, the fact that everything is so intra-connected, everything connected to the system, you can argue that the bailout was or was not worth the. you will not find many people these days who will say it did not serve its purpose at the time whether or not you agree.

the entire system collapsing is something i don't think you'll see many people said that the country could have dealt with. host: "the wall street journal" had an article with a picture of the eight major agencies including teh fdic, the officer of the comptroller of the currency, the office of the thrift supervision, the commodities trading commission, the federal housing finance, and the national credit administration, among others. let's talk about the expanded role in this regulatory scheme. who are the winners and losers? guest: the office of supervision will certainly be a loser. they will probably be merged with the o.c.c. were just disbanded altogether. the winners -- the fdic will

certainly -- sheila bair, the current head of it has taken a very large role and has many supporters. there will likely be given the power to wind down these non- banking institutions such as aig and there are a couple of others that might be eliminated or else emerged. the consumer powers' would be taken from the sec -- that will not happen. it is not politically possible right now. both agencies went from being on the brink to work more in concert with each other now. host: here is michigan, good morning. caller: the caller who suggested we just let everything fall apart and go back to the gold standard, that is not only naive, but little in sen.

he did mention phil gramm -- how much of the collapse has to do with his getting rid of the fire wall between the commercial and public banking institute? you can trace anything that has gone wrong in the country back to the beginning, whenever they de-regulated would never fail. if everything had been watched we would not be in this problem today with anything from a trucking to the banking institutes. hostguest: regarding phil gramm, there are many people who can share the blame. it is not a party-specific or person-pacific, or regulator, specific. there was a grand failure overall in the system. people just messed up. in terms of the de-regulatory

philosophy, they are trying to address that now. you will see stronger ones. the hope is not to go too far. that they find some way to balance it. host: you write in your piece about the release of trading secrets such as how many shares of stock have been borrowed and sold. you " richard baker, former member of the house. in that analogy, of the fried chicken analogies -- those also fall under government regulations in terms of food standards. so, what is his point?

guest: essentially, anyone as a hedge fund manager says, look, we did not necessarily cause this. but mr. baker is saying is the hedge funds have largely survived or even thrive. their fear is that having all the information available will essentially cut off business. hedge funds operate on a scientific methodology. the ability for all others to see their secrets they think will severely restrict their ability to make money. host: is the accountability of regulator is really important, doesn't this imply full disclosure? what did the regulator know and when? guest: absolutely.

in terms of hedge funds you will likely see them find their way into the legislation passed by the end of the year -- at least some form of registration. there will probably have to give information to a particular rate good. intermission that would never become public. but regulators would have some idea of where they're going. host: as we go to our last call. charts in your article this morning -- hedge funds still going strong. credit based swap's show the fastest growth. we will go to virginia on our democrats line. caller: hello. i wanted to make a comment. there has been a lot of talk about the federal reserve. the american people need to know that not only is the

federal reserve a private -- i mean, one of the founding board members -- he said something along the lines, i care not who writes the laws in the country as long as you give me the right to take money. there has always been a jewish chairman. can you comment? guest: in terms of the religious affiliation of the chairman i do not really have anything on that. in terms of the fed they were appointed by the prison and are designed to be away from the politics. they are most affected -- by the president and are designed to be independent. they are most effective if they are not affected by the political ebbs and flows of the current times. the biggest concern for people is that they are so involved in

the rescue operation of the financial system that all of a sudden they are under the watch of lawmakers. if you were to ask, the goal is to pull back to the previous state. hopefully, avoid ever been involved politically again. host: phil mattingly, of cqpolitics.com -- we have links to online at c-span.org. guest: thank you for having me. host: will speak shortly with kip hawley about air travel. ♪ >> people like to have books.